What is the law behind economic incentive agreements?

The city of Austin, like many municipalities throughout the state, can recruit business with economic incentive packages. That mechanism—allowing cities to provide grants to organizations for economic development that serves a public purpose—was created by the state in 1987 under Texas Local Government Code Chapter 380.

Austin City Council on April 13 approved an economic incentive agreement with Merck & Co. Inc. to establish an information technology hub focused on digital health. The agreement has yet to be signed.

Austin’s incentives are performance-based. Should Merck finalize the agreement, it would need to honor its commitment of creating a minimum of 600 jobs over a 10-year period in addition to meeting its contractual and compliance requirements. Merck is eligible for as much as $856,000 in economic incentive payments and $200 for every new job created.

For more information, read our May edition story on local Chapter 380 agreements.